GuarantCo provided a USD 20 million guarantee (KES equivalent) for the Contingent Capital Facility (CCF) of Dhamana Guarantee Company based in Kenya. The guarantee has a tenor of 23 years.

Dhamana is the most recent Credit Enhancement Facility (CEF) established by PIDG with a mission to mobilise local currency private sector financing into critical sustainable infrastructure projects and develop local capital markets by providing non-payment credit guarantees. The CCF, enabled by GuarantCo’s credit enhancement, will allow Dhamana to expand its capital base and increase the size and quantum of guarantees that it can issue. The CCF supports Dhamana’s growth and profitability in a non-dilutive way for shareholders.

In addition, Dhamana will benefit from the 20 years of knowledge and experience that GuarantCo brings in writing guarantees in low to middle-income countries, which is aligned with GuarantCo’s mandate to build local market guarantee capacity by supporting the development of CEFs.

Kenya has invested heavily in infrastructure development in recent years, and the progress made is a key factor in transforming the economy, enhancing domestic and regional connectivity and strengthening Kenya’s position as a regional hub. However, the country’s infrastructure deficit prevails, exacerbated by an infrastructure financing gap of c. USD 5 billion annually. Dhamana therefore has a vital role to play in attracting and multiplying local currency private capital into sustainable infrastructure projects.

The primary route to delivering sustainable development impact from this transaction is market transformation, as Dhamana is the first CEF backed by the private sector in Kenya and as such will increase the availability of domestic capital for sustainable infrastructure. The transaction also facilitates the mobilisation of local currency investment into new infrastructure-related asset classes.

Additionally, Dhamana will only pursue transactions that are Paris Aligned, and estimates that 30-40 per cent of the portfolio will be classed as climate finance.

It is anticipated that the transaction will contribute towards the United Nations’ Sustainable Development Goals 9 (industry, innovation and infrastructure) and 13 (climate action).